Tiscali buys LineOne

Waited six months and saved £340 million

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Tiscali has bought British ISP, LineOne, for E100 million (£62.3 million) in paper and a small amount of cash.

The deal was completed this morning - some six months after it was reported that joint-owners, BT and United News and Media, were looking for a buyer.

At the time some said LineOne was worth E642.5 million (£400 million).

Today's sale price - E80 million (£50 million) in shares and E20 million (£12 million) in cash - represents a significant discount on that figure.

Putting a brave face on things a spokesman for BT said: "In this current market it is a good deal."

However, the money received from this deal will do little to alleviate BT's debt problem. Indeed, it highlights one of the problems BT faces in paying off its debts as it tries to sell assets that simply aren't worth what they used to be.

Tiscali reckons this deal puts it well on course to be the third biggest ISP in the UK behind Britain's biggest French-owned ISP, Freeserve, and AOL UK.

However, Tiscali's strategy of snapping up ISPs as a way of growing its business means that - in the name of consolidation - casualties are almost inevitable.

Tiscali is already carrying out a root and branches review of its operation in Britain following the company's acquisition of WorldOnline and LibertySurf. Only last week it made 53 people redundant with more expected to come.

It seems hard to believe that employees at LineOne will be immune from this process of consolidation.

No one was available from Tiscali or LineOne to comment by press time. ®